Economic Review – December 2017

The rate of inflation in the UK has risen to its highest level in nearly six years,
although the consensus amongst economists is that it may now be reaching a peak.

The International Monetary Fund (IMF) has cut its growth forecast for the UK
economy, citing Brexit uncertainty for the downgrade.  While presenting the organisation’s first full assessment of the UK economy since the EU referendum, IMF managing director Christine Lagarde suggested that UK growth was “a bit of a disappointment” compared to the relative strength seen across the rest of the world.

Equity investors eagerly anticipate the New Year as pockets of global economic growth helped power several major markets to double digit gains in 2017.  The FTSE100 ended 2017 on a new record high, closing the year out at 7,687.77, a monthly rise of 4.93% and an impressive 7.63% increase over the year – the blue chip index reached a new intraday record of 7,697.62 on December 29.

The average increase in wages is still lagging behind the prevailing rate
of inflation, leaving UK households struggling to cope with a squeeze on their incomes.

EU leaders have agreed to move Brexit negotiations on to the second phase,
although they have warned that this stage will be significantly harder than the first.